Crude-oil prices pared some losses in mid-Asia trade Monday after tumbling more than 6% in the opening hour following a failure of the key producers to agree on a production cap that could have tightened up the supply market.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in May traded at $38.28 a barrel, down $2.08, or 5.2% in the Globex electronic session. June Brent crude on London’s ICE Futures exchange fell $2.20, or 5.1%, to $40.92 a barrel.

The sharp decline in oil spilled over to regional stocks. Energy stocks in Hong Kong and Australia were all off about 2.8%, while the broader Hang Seng Index and S&P/ASX 200 benchmarks fell 1.2% and 0.3%, respectively.

Japan’s Nikkei Stock Average was off 3%, as the Japanese yen came close to reaching a fresh 18-month high. Elsewhere, the Shanghai Composite Index slipped 1.5%,

Over the weekend, Russia and heavyweight producers inside the Organization of the Petroleum Exporting Countries walked away from a much-anticipated meeting empty handed. The group had gathered to discuss a production cap to limit output to January’s levels as a way ease the global oversupply.

The key driver behind the breakdown was Saudi Arabia’s refusal to participate in the deal without its geopolitical rival Iran pledging to do the same. Since economic sanctions against Iran were lifted in January, the country has vowed to keep ramping up production until output is back up to at least 4 million barrels a day.